Saudi’s crude story overshadows its non-oil sector. That’s not a bad thing
After the painful dislocations of the COVID-19 pandemic, which was preceded by a period of low oil prices and fiscal consolidation, the Gulf economies appear to be firing on all cylinders.
Saudi Arabia’s annual real growth rate reached an estimated 9.9 percent in the first quarter. Compared to the last quarter of 2021, the seasonally adjusted real gross domestic product advanced by a robust 2.6 percent.
These numbers reflect a broader regional trend. The World Bank recently projected GDP growth of 5.9 percent for the Gulf Cooperation Council region this year, followed by 3.7 percent in 2024. These figures reflect an encouraging improvement after a trying period and promise a paradigm shift from the historically low trend growth and recurrent volatility during the decade that preceded the pandemic.
Much of the growth increment is coming from increased oil production as the OPEC+ group continues its return to pre-pandemic levels.
The Saudi oil sector’s year-on-year growth reached a remarkable 20.3 percent in the first quarter and was 2.9 percent higher than the preceding quarter.
In addition, the OPEC+ group recently agreed to bring forward its targeted monthly production increases in July and August from 432,000 barrels per day to 648,000 bpd.
The Gulf OPEC members will likely…